Shared by
thearmotrader
Great trade idea, bad stop management.
163 was pre-mkt support. Got long and bottomed ticked GLD intraday.
Stop was below .89. So risk was about 12 cents.
Target was 1 point (164). As you see, it got there, but without me.
Bad idea to move stop up that early. Shouldve waited a little longer OR shouldve waited to see if it started HOLDING below.
Guess I can blame some on rust (didnt trade basically all of last week), but no excuses. Need to execute here.
Execution detail:
| Date/time | Symbol | Side | Price | Position |
|---|---|---|---|---|
| 2012-03-26 09:52:43 | GLD | buy | $163.000 | long |
| 2012-03-26 10:14:42 | GLD | sell | $163.130 | 0 |
Comments
ckz8780
Greg and Thermo - dang guys I think this happens to all new traders. I can't tell you how many times I have adjusted my stops and then been stopped out just before the stock runs.
A couple things to consider:
On expensive stocks ($50+) 10-15 cent stops might seem like a good idea but they almost never are. They reduce risk, but also dramatically reduce probability. Most $50+ stocks I trade I have at least a 40-50 cent stop and adjust my position size accordingly.
Just accept the risk. You were willing to lose 12 cents, so honor the stop and let it ride. It's one of the hardest things to get over and I'm still working on it myself, but getting closer. I only adjust my stops up now if there are at least two levels of support under the current price (i.e. I buy at $5.00, sto pops to 5.10, flags, then 5.25, flags, when it breaks 5.25 I will adjust my stop to breakeven or 5.09. Other than that it stays where it was because otherwise this happens.
GLD, SLV and other similar names tend to move in tandem w/ the market so keep an eye on general market action too. If the market looks like it's gonna rip but your GLD is dropping down a few pennies, don't sweat it. When the market rips GLD will go with it!
Overall great idea and perfect entry, just gotta have a little more confidence which will come with time and more winning trades!
gregr
Re this:
"On expensive stocks ($50+) 10-15 cent stops might seem like a good idea but they almost never are. They reduce risk, but also dramatically reduce probability. Most $50+ stocks I trade I have at least a 40-50 cent stop and adjust my position size accordingly."
I'd argue it depends on how exactly you're trading. If you're trading from the daily or 15-min charts, say, then sure, wider stops might make more sense. If you're trading from the tape and 1/5-min, though, IMHO you can get away with much tighter stops.
In armo's case, he identified 163.0 as an important support level; if it dropped to say 162.90, his reason for being in the trade no longer existed so he probably would have gotten out. If it dropped, there would be no reason for him to let it swing down 0.50 when he already knows he's wrong... IMHO of course. :)
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This is a perfect illustration of something that has plagued my trading...I'm always aggressive about moving my stops up, and much of the time this is exactly what happens to me!